FraudTalk is a blog focused on the review and discussion of recent significant cases of fraud, corruption and employee misconduct - particularly major embezzlement cases in the US. Fraud Talk is published by Chris Marquet, Chairman & CEO of Marquet International Ltd., an international investigations, litigation support and due diligence firm.

Sunday, January 31, 2010

The Michigan Court of Appeals on Wednesday again upheld a minimum nine year and four month prison term for Harriet Laura Northrup, 61, of Adrian, Michigan, who pleaded guilty to embezzling a total of approximately $164,000 from a local law firm and one of its clients in 2007. In a plea agreement, Northrup pleaded guilty to 8 out of the original 80 charges filed against her for forgery and embezzlement. Prosecutors alledged that Northrup wrote and forged checks from the law firm between 2005 and 2006 totalling some $120,000 and stole an additional $44,000 from the estate of one of the firm's clients.

Saturday, January 30, 2010

Rev. Robert Chukwu, 59, was arrested yesterday and charged with embezzling nearly $200,000 from the Diocese of La Crosse and two Crawford County parishes that he served. Authorities believe Chukwu misappropriated $196,000 from St. Mary Parish in Gays Mills and St. Philip Parish in Soldiers Grove and the La Crosse Diocese itself. According to reports, Chukwu, who holds dual citizenship in the U.S. and Nigeria, confessed that he invested parish and diocese money in Nigeria. Authorities allege that Chukwu also sent various items to family members and others in Nigeria.

Sujata "Sue" Sachdeva, 46, of Mequon, Wisconsin, pleaded not guilty yesterday to charges she embezzled as much as $31 million from Koss Corporation, a publicly traded head phone manufacturer where she had been employed as Vice President of Finance, Secretary, and Principal Accounting Officer. According to the indictment, Sachdeva authorized numerous massive wire transfers of funds from company bank accounts to pay for her American Express credit card bills and obtained cashier's checks to pay for personal expenses, among other things. The scheme dates back to at least 2004, according to reports. Her trial is scheduled for April 19th.

Friday, January 29, 2010

Kathryn Britto-Florence, 51, of Walnut Creek, California, was arrested Wednesday for allegedly embezzling more than $900,000 from an unnamed appliance installation services company based in Pleasanton, where she had been employed as a senior accountant. According to authorities, Britto-Florence paid herself extra paychecks issued to a fictitious name that she deposited into her own accounts. The scheme reportedly went on for about two years. She is on probation in Contra-Costa County for a prior conviction in a similar embezzlement scheme. Authorities suspect she may have been embezzling in order to pay for the restitution ordered in the earlier case.

David J. Hernandez, 49, of Chicago, Illinois, plead guilty yesterday to one count of mail fraud in connection with a Ponzi-type investment fraud scheme he ran that bilked about 250 investors out of some $6.8 million. Hernandez, a partner in in a Chicago web radio sports show (ChicagoSports Webio.com), also ran a purported investment firm, NextStep Financial Services, Inc., and promised investors returns of as much as 16 percent every thirty days for "risk free" "guaranteed investment contracts" managed by Hernandez. However, there were, in fact, no investments at all. When the fraud scheme collapsed last June, Hernandez fled Chicago, but was captured and arrested in Normal, Illinois, after reportedly attempting suicide. Hernandez' scheme ram from at least February 2008 until June 2009. His wife, Gina M. Hernandez, was also named in the original SEC complaint. He and his wife reportedly spent the investment funds on a lavish lifestyle. According to reports, Hernandez is a convicted felon who has filed bankruptcy three times. He was indicted in 1997 and plead guilty to one felony count of wire fraud for misappropriating nearly $600,000 in investor funds from Columbia National Bank in Chicago.

The Rev. Isaias Rivera, pastor of Tabernaculo de Adoracion y Musica (Tabernacle of Praise and Music) in Lawrence, Massachusetts and his wife, Vivian Rivera, were arrested yesterday, together with a church secretary, for embezzling a total of about $137,000 from church coffers. According to authorities, the Riveras, and the church secretary, Kizzella Rivera (not related), misappropriated the funds by cashing unauthorized church checks over a period of five years from from 2004 to 2009. The police report indicates that Isaias Rivera (pictured upper left) allegedly took $102,732.28, Vivian Rivera (pictured upper right) cashed three checks in 2005 totaling $24,500, and Kizzella Rivera, wrote checks to herself totaling $9,500. The church is owned and run by the The Presbytery of Northern New England.

Debra Ann Boynton, 44, of Troy, Michigan, was sentenced to 33 months in prison for embezzling more than $640,000 from Standard Federal Bank — later LaSalle Bank Midwest and now Bank of America, where she had been employed an assistant in the compliance and community development. Boynton pleaded guilty to bank fraud last July after being accused of forging and falsifying general ledger debit vouchers between August 2000 and November 2007. Boynton was also ordered to pay $641,477 in restitution.

Arron K. Rhodes, 27, of Lexington, Kentucky, and the current owner of Buddy's Bar & Grill in Lexington, has been sentenced to 30 months in prison for embezzling more than $300,000 from Comtronics, Inc., where he had been employed as a bookkeeper. In a civil complaint filed by the company last August, it was alleged that between 2005 and his dismissal from Comtronics on January 19, 2009, Rhodes embezzled $381,100.18. In the criminal plea agreement, Rhodes admitted that he made 40 unauthorized fraudulent wire transfers, issued nine unauthorized checks, made unauthorized charges on company credit cards and forged the signature of the company's founder. Rhodoes attorney claimed he had been diagnosed as bipolar with severe depression.

Rhonda Sue Merritt, 43, of Cadillac, Michigan was arrested and charged yesterday with embezzling more than $100,000 from Cadillac Family Physicians, P.C., where she had been employed as the office billing manager. Merritt had been employed at the medical office for 17 years, according to reports. She was fired last August after the financial discrepancies were discovered. An investigation revealed that Merritt allegedly stole more than $100,000 over nearly a three year period, from January 1, 2006 until August 27, 2009. Details on the nature of her alleged thefts have not yet been released. She faces up to 20 years in prison, plus fines and restitution, if convicted.

Thursday, January 28, 2010

J.V. Huffman Jr., 46, of Conover, North Carolina, pleaded guilty on Tuesday to 14 counts of securities fraud and 14 counts of obtaining property by false pretenses for his role in a Ponzi-type investment fraud scheme that defrauded more than 500 investors out of some $25 million over the course of about 9 years. Upon his guilty plea, Huffman, whose scheme wiped out the savings of many of his victims, was sentenced to more than 30 years in prison. Through his company, Biltmore Financial Group Inc., Huffman lured potential investors with the promise of returns of between 10 to 15 percent on the purchase and sale of mortgages. According to prosecutors, Huffman spent his ill-gotten gains on a lavish lifestyle, including purchasing luxury cars and trucks to investing in properties across the Carolinas, and purchasing a luxury box at Bank of America Stadium, among other personal items. His victims included many members of his own church and bible study group.

Terry Ann Swatsenberg, 46, of Southaven, Mississippi, plead guilty yesterday to charges she embezzled more than $100,000 from the City of Southaven, where she had been employed as municipal court clerk. Swatsenberg is alleged to have misappropriated monies from court fines and other fees that she handled for the court. She is alleged to have stolen the funds over a period of approximately one and a half years between 2006 and 2008. Swatsenberg was originally arrested in December of 2008 and it was believed at the time that the embezzlement was far less. Now authorities believe that the loss from her thefts "runs well into six figures."

Lisa Marie Scharff, 36, of Vassar, Michigan, was arrested and charged with embezzling more than $250,000 from McLaren Regional Medical Center in Clayton Township, where she had been employed as a billing clerk. Scharff is alleged to have stolen patient payments over a five year period. She reportedly used the misappropriated funds to support a lavish lifestyle, including building a pool at her boyfriend’s house, trucking in beach sand for a party, buying a wedding dress and other personal expenses. Prosecutors alleged that the total amount Scharff embezzled was $253,308.08 where she misappropriated as much as $10,000 in a given month. She has been charged with 13 felony counts, including 12 embezzlement counts and one count of racketeering.

William S. Burke, 38, of Plymouth, Massachusetts was charged yesterday with embezzling some $222,000 from South Shore Hospital's Dare to Care program, for which he had served as an administrator and coordinator over the past four years. According to prosecutors, Burke solicited funds for the program by mail and diverted the monies to his own bank account over a two year period, from 2007 to 2009. He is also accused of stealing rebate money from medical vendors. Burke is alleged to have created a bank account in the name of South Shore Hospital Dare to Care Fund, and used some of the misappropriated money to pay personal bills. He faces up to 20 years in prison, plus fines and restitution, if convicted.

Loren Larry Mundt, 52, of LaCrosse, Wisconsin, is currently on trial for embezzling more than $100,000 in cash and equipment from Gundersen Lutheran Medical Center, where he had been employed as the hospital's facilities director. According to prosecutors, Mundt collected cash from vending machines, had checks issued to himself and kept or sold hospital equipment. Mundt, who was originally arrested in 2007, faces more than 30 years in prison, if convicted. Research reveals that Mundt was previously convicted on two counts of bank theft in the late 1980s.

Susan M. Burgher, 48, of Breckenridge, Michigan, has pleaded guilty to one count of embezzlement of more than $100,000 from Innovative Communications Inc., with whom she had been employed as a bookkeeper. As part of the plea agreement, Burgher will spend at least 21 months in prison and was ordered to pay $594,000 in restitution to the company, an amount adjudicated in a separate civil suit. Prosecutors originally charged Burgher last August and alleged that using her position, Burgher paid personal bills and issued duplicate checks to herself for "a number of years." Final sentencing is scheduled for March 4th.

Update (3/5/10): Burgher was formally sentenced this past week to 21 months to 20 years in prison after pleading guilty to one count of embezzlement of more than $100,000. She must also pay Innovative Communications, Inc., for whom she had worked as a bookkeeper, $594,000 in restitution.

Wednesday, January 27, 2010

Robyn Anne Garver, 39, of Alanson, Michigan, pleaded guilty to one felony count of embezzlement more than $20,000 in a plea deal following her arrest for embezzling more than $100,000 from Windjammer Cove and Marina Development, of Petoskey, Michigan, where she had been employed as a bookkeeper. According to investigators, Garver purchased stamps and phone cards using company checks, selling them on eBay, and shipping them with a company fed-ex account. The scheme lasted five and a half years, from May 2003 to November 2008, according to authorities. She was originally charged last June with 8 felony counts, including criminal enterprise conducting, embezzlement of more than $100,000, two counts of use of a computer to commit a crime and four counts of "uttering and publishing." Garver is due to be sentenced on March 15th, when she faces up to 10 years in prison, plus restitution.

Update (3/16/10): Garver was sentenced today to one year in prison for embezzling more than $100,000 from Windjammer Cove and Marina Development where she had been employed as a bookkeeper. She must also pay $100,000 in restitution.

John "Jack" W. Manning, 54, of Millington, New Jersey, was sentenced to five years in prison for embezzling some $6.2 million from American Leasing Corporation, a vehicle and equipment leasing company based in Essex County, New Jersey, for which he had served as president. Manning, who was also ordered to pay full restitution, pleaded guilty in July to one count of wire fraud. Prosecutors alleged Manning devised a "complex series of sale and leaseback transactions" to issue checks to phony corporations he created with names similar to actual company clients. Manning then deposited the checks into accounts he controlled and used the money to buy beachfront property and a restaurant and for travel and other personal expenses. Manning's scheme allegedly lasted from July 2004 until February 2009, according to the criminal Information. Manning had reportedly been employed by the company for 25 years.

Theresa A. Klein has been charged with embezzling more than $113,205.85 from the Cimarron Hills Fire Department, in Colorado where she had been employed as an administrative assistant for 11 years. Klein's alleged embezzlement reportedly lasted about three and a half years from 2005 until July 2008 when discrepancies were found and she was fired. According to authorities, Klein stole some $99,000 in cash and spent another $14,000 in department money for personal expenses, including car repairs and getting a car towed for her boyfriend. The thefts came to light after department officials were auditing what happened to a FEMA grant. According to court documents, Klein has a past with bill collectors that have taken her to court for not paying her bills. She has been charged with three counts of felony thefts.

Thomas B. Dalton III, 55, of Barneveld, New York, was indicted yesterday on 11 felony charges for allegedly embezzling more than $400,000 from Divine Brothers Co. of Utica, a wheel buffing company for which he had served as chief operating officer. Prosecutors allege that over the course of 10 years, Dalton used his position to give himself unauthorized raises and bonuses and misappropriate company funds to pay personal expenses. Specifically, Dalton was indicted on three counts of second-degree grand larceny, one count of third-degree grand larceny and seven counts of first-degree falsifying business records. Dalton has plead not guilty and will be back in court on February 17th.

Tuesday, January 26, 2010

Victoria Munson Oathes, 40, of Haughton, Louisiana, has been sentenced to 45 months in prison for embezzling $206,672.82 from Ark La Tex Farms Inc., where she had been employed as office manager. Prior to her sentencing, Oathes plead guilty to one count of wire fraud and one count of aggravated identity theft. According to authorities, Oathes' scheme, which involved unauthorized use of company credit cards, lasted three years. According to investigators, Oathes intercepted credit card statements, forged signatures on checks and changed mailing addresses for credit card statements to her home address. Oathes was also ordered to repay $17,534.33 to the Louisiana Department of Social Services because she obtained food stamps and child care money by under-representing her income and forging signatures on employer wage verification forms. According to reports, Oathes had a gambling problem.

Michelle D. Knebel, 38, of Pocahontas, Illinois, has been sentenced to 33 months in prison for embezzling some $166,220 from the First Mid-Illinois Bank where she had been employed as an assistant manager. Knebel's thefts from the bank were ostensibly to cover up a ten year long embezzlement scheme from Highland School Charitable Foundation for which she had also served as bookkeeper. Knebel, who plead guilty last August to the bank embezzlement, has been also ordered to pay $149,622 in restitution. According to reports, when the charity decided to close its account at the First Mid-Illinois bank, Knebel began transferring funds from other clients to cover the losses she had created.

Monday, January 25, 2010

Daniel J. Parrilli, 59, of Carol Stream, Illinois and Christopher R. Andersen, 59, of Westmont, Illinois, were charged today with operating a Ponzi-type investment fraud scheme that bilked some 100 investors out of $4 million. Both Parrilli and Anderson are previously convicted felons. According to the indictment, in or about 2006, Parrilli and Anderson ran a company called Sundown Entertainment, Inc. which promised investors a return of 25 to 100 percent in as little seven days. The company was supposedly to earn those incredible returns on the sale of films and comic books. According to reports, Andersen pleaded guilty in 2001 to another investment fraud scheme and was sentenced to 36 months in prison. He served time at the federal prison in Oxford, Wisconsin, where he reportedly met Parrilli, who had pleaded guilty in a separate fraud case in 2001.

Philip McCabe, 49, of Reading, Massachusetts, pleaded guilty Friday and was sentenced to two years in prison, with six months to serve, and the remainder suspended, for embezzling nearly $500,000 from WGBH public television in Boston. According to prosecutors, McCabe, who had control over corporate accounts to pay vendors, used those accounts to pay personal expenses on corporate and personal credit cards for such things as vacations, golf outings, restaurant tabs, liquor, clothes, household goods, gas and many other personal expenses over a nine year period from 1998 to 2007. McCabe was originally arrested and charged last January 2009.

James P. Crowley, 51, of Torrington, Connecticut, was accused Friday of embezzling as much as $1 million from his employer, FCT Electronics LLP, where he has served as company controller. Authorities believe Crowley's embezzlement scheme lasted a period of between four and five years. Crowley was arrested last month on charges of "patronizing a prostitute" after neighbors became concerned and reported suspicious activity at Crowley's apartment. This led to a forensic audit conducted by the company, revealing the theft, according to reports.

Milton Retana, 46, of Huntington Park, California, was convicted by a jury last week on six counts of mail fraud and one count of making false statements to government in connection with a fraudulent Ponzi-type investment fraud scheme that bilked investors out of some $62 million. According to prosecutors, through his company, Best Diamond Funding, Retana, a native of El Salvador, lured mostly Spanish speaking investors with promises of up to 84 percent returns from real estate investments. Instead, Retana allegedly used the investment funds to enrich himself and pay off earlier investors. According to reports, Retana solicited investors in Spanish-language magazines, on the Internet and during weekly investment seminars across Los Angeles. His scheme began in or about 2006 until he was arrested in December 2008.

Update (4/30/10): Milton Retana was sentenced to 25 years in federal prison for six counts of mail fraud and one count of making false statements to government agents. Prosecutors alleged that during the course of Retana’s Ponzi scheme, he collected about $62 million from approximately 2,300 victims, who suffered actual loses of about $33 million.

Sunday, January 24, 2010

Arthur L. Heffelfinger, 63, of East Helena, Montana, has pleaded not guilty to running a Ponzi-type investment fraud scheme that allegedly bilked investors out of some $2 million. Heffelfinger, through his company, KMS Financial Services, is accused of operating a fraudulent pyramid promotional investment scheme, theft and exploitation of an older person, taking investment funds for his own personal use. According to the criminal complaint, from February 2001 through September 2009, Heffelfinger is alleged to have taken $2.02 million from about 20 clients, whom he still owes a total of $965,500, not including interest. His trial is scheduled for April 26th.

Saturday, January 23, 2010

Robin Dawn Ramming, 34, of Hinton, Oklahoma, pleaded guilty yesterday to to two counts of felony embezzlement, admitting she stole at least $425,000 from the Hinton Economic Development Authority (HEDA) where she was employed as an accountant. According to prosecutors, Ramming's scheme lasted from May 31, 2000 to November 30, 2006. According to reports, Ramming maintained two sets of books to hide her thefts. She allegedly used her position to make cash withdrawals for her own personal benefit. Authorities believe Ramming stole the money to fund lavish family vacations and a gambling habit. She is due to be sentenced on March 31, 2010.

Update (6/30/10): Ramming was sentenced yesterday to 28 months in prison. She was also ordered to pay $395,700 in restitution to HEDA. Ramming was also ordered to pay $117,257 to the IRS for back taxes on her ill-gotten gains from a separate embezzlement scheme wherein Ramming admitted to embezzling $200,000 in 2007 from Wheeler Chevrolet in Hinton. No other criminal charges were filed in that case because she had reportedly made full restitution.

Friday, January 22, 2010

Julia Elise Leppo, 39, formerly of Lake Charles, Louisiana and currently of Lemont, Illinois, was sentenced to 51 months in prison for embezzling $384,032.78 from First Baptist Church of Westlake, Louisiana, where she had served as financial secretary. According to prosecutors, Leppo obtained unauthorized credit cards in the names of the church and a former church employee, then used the cards to charge personal expenses and withdraw cash from ATMs. She also forged church checks to pay credit card balances and issued checks to herself under a fictitious name, according to prosecutors. The scheme lasted for approximately three years, according to reports. Leppo was also ordered to pay full restitution.

Kevin Miller, 55, of Fairfield, Ohio, pleaded guilty yesterday to one count of conspiracy to commit mail fraud and one count of obstruction of an investigation for his role in a real estate investment fraud scheme between 2005 and 2008 that defrauded approximately 80 victims out of approximately $7.3 million. According to prosecutors, Miller was a salesperson for Capital Investments and "duped" investors into fraudulent real estate investments in Ohio and Florida. He sent letters to investors claiming the investments were safe and secure and a success, earning higher returns than most investments. It turns out that the properties in question were owned by Capital Investments, related entities and family members and were "in foreclosure, disrepair or lacked substantial equity." Prosecutors alleged that many of Miller's victims were people Miller had attended church with at the Princeton Pike Church of God, including elderly and inexperienced investors.

Kathy Borrego, 51, of Abiquiu, New Mexico, has been chargd with embezzling nearly $3.4 million from Jemez Mountain Schools in Galina, New Mexico, where she had been employed as business manager. Prosecutors allege that Borrego wrote at least 538 checks to herself, her boyfriend and her daughter over a seven year period, totalling $3,378,701. She faces six counts of embezzlement, one count of improper use of official anthems and four counts of tax evasion. Borrego also faces a civil suit filed by the school district to freeze her assets and recover the monies. According to reports, Borrego began working at the school district in 1999, but auditors were unable to access necessary bank records to probe the district's finances for the first three years she worked there. The small, New Mexican school district has only 375 students.

Thursday, January 21, 2010

Tracy Laird, 40, of Ellisville, Mississippi, plead guilty and was sentenced yesterday to five years in prison, with an additional five years of post-release supervision for embezzling more than $90,000 from Jones County Junior College where she had been employed in the business office. Laird was also ordered to pay required to pay $110,429.46 in restitution. According to Jones County Assistant District Attorney Dennis Bisnett, Laird would "write bad checks to the business office, cash the checks and shred documents. She would hide it from the accounting system to not be detected, and keeping the money for herself.” The scheme reportedly lasted for about a year and a half, from July 2007 to February 2009. Laird was indicted last September. Bisnett is further quoted as saying, “People get in an economic bind and decide they need to turn to embezzlement. Bad things happen to good people. At first, they’re just taking a little, then it gets out of hand and they can’t pay it back. They always had the intention to pay it back to start with.”

Sujata "Sue" Sachdeva, 46, of Mequon, Wisconsin, was indicted yesterday by a grand jury in Milwaukee on six counts of wire fraud for her alleged embezzlement of as much as $31 million from Koss Corporation, a publicly traded head phone manufacturer where she had been employed as Vice President of Finance, Secretary, and Principal Accounting Officer. According to the indictment, Sachdeva authorized numerous wire transfers of funds from company bank accounts to pay for her American Express credit card bills and obtained cashier's checks to pay for personal expenses. Further, Sachdeva attempted conceal her fraud by directing other Koss employees to make numerous fraudulent entries in Koss’ books and records. The indictment alleges that her embezzlement scheme commenced in January 2004 and lasted nearly six years until December 2009. According to indictment, Sachdeva use the proceeds of her fraud to purchase her home in Mequon, Wisconsin, a vacation ownership interest in the Princeville Ocean Resort Village on Kauai, Hawaii, a 2007 Mercedes Benz automobile and numerous personal luxury items, including clothing, jewelry and art objects. The indictment seeks to seize those items as well as numerous other luxury items located in two storage units in Milwaukee and held at five luxury stores in the area. Each wire fraud count carries a sentence of 20 years in prison plus a fine of $250,000, if convicted. She was arrested in December after the results of an internal investigation were turned over to authorities. She had been employed by Koss as vice president of finance since 1992. Until recently, Sachdeva sat on the Board of Trustees of Cardinal Stritch University and her husband, Ramesh C. Sachdeva, is a prominent pediatrician in the area. He also serves as an adjunct professor of law at Marquette University. Ramesh Sachdeva has not been accused at this time of complicity in her scheme. According to her attorney, Michael F. Hart, Esq., principal in the law firm of Kohler & Hart, LLP, and a prominent criminal defense attorney in Milwaukee, one defense planned for Sachdeva is mental health. Hart is quoted as saying, "We intend to show that mental health issues played a substantial role in Ms. Sachdeva's conduct."

Wednesday, January 20, 2010

Judith Withers-Hanson, 67, and the former Executive Director of the Atlanta chapter of the NAACP, has been charged with embezzling some $275,000 from the non-profit civil rights organization. Hanson was accused, together with her former assistant, Saundra Douglass, in a scheme whereby they applied for and obtained American Express cards to pay for personal expenses. According to the police report:

Over a period of almost 6 years, Hanson and Douglass used the cards for personal expenses, paid the bills using checks belonging to the association, and covered the usage by making false entries into the association’s accounting records. Some of the expenses paid involved personal dental work for both associates, college tuition, expensive meals and furniture purchases not for use by the association.

Lona Jean Aldrich, 52, of Vermontville, Michigan, was arrested Tuesday on charges she embezzled "well in excess" of $200,000 from EYE & ENT Specialists in Hastings, Michigan, where she had been employed as office administrator for 13 years. Specifically, Aldrich was charged with embezzlement over $100,000, using a computer to commit a crime, and uttering and publishing.

Update (11/3/10): Aldrich was sentenced to "five to fifteen" years in prison for embezzling what is now determined to be more than $500,000 from EYE & ENT Specialists. She must also pay restitution of $460,000.

Lydia Kathleen Fitzgerald, 48, formerly of Los Alamitos, California, is expected to be sentenced Friday for embezzling more than $435,000 from the Casa Youth Shelter where she had been employed as executive assistant. According to authorities, from April 2004 to December 2007, Fitzgerald used her position to forge checks written to herself and open a credit card in the name of the shelter to do home remodelling, go on expensive vacations, purchase automobiles, a boat and other personal luxuries. Fitzgerald, who plead guilty last month, was ordered by the court to pay $390,000 in restitution plus $93,000 in back taxes. She is expected to be sentenced to four years in prison.

Update: Fitzgerald was sentenced to 4 years in prison and ordered to pay more than $390,000 in restitution to the Casa Youth Shelter. She must also repay the state Franchise Tax Board more than $93,000 plus 10% interest from the date of loss.

Paul Joseph Reardon, 74, of Matthews, Virginia, a retired Virginia State Police trooper, was indicted yesterday on charges embezzled some $110,000 from the Mathews Volunteer Fire Department, where he had served as treasurer for 30 years. According to investigators, Reardon wrote checks to himself for cash during the course of 2009.

Update (7/20/10): Reardon pleaded guilty in a plea agreement, admitting that he stole some $216,000 from the Matthews County Volunteer Fire Department where he had been treasurer. Authorities believe Reardon made more than 100 unauthorized transactions and took $221,000 in misappropriated funds. The judge ordered him jailed.

Update (9/21/10): Reardon was sentenced to five years in prison yesterday for embezzling $221,000 from the Matthews County Volunteer Fire Department. He was also ordered to pay restitution of $216,000 at $1,000 per month.

Susan J. Mareska, 50, of Miller, South Dakota, has been sentenced to 33 months in prison for embezzling $166,834 from American Bank and Trust where she had been employed as a bank teller. Mareska plead guilty in November 2009 to bank embezzlement. According to court documents, Mareska developed a gambling habit and created false bank transactions to embezzle money over a seven year period between November 2001 and October 2008. She was originally charged with three counts of bank embezzlement, one count of bank fraud and one count of false bank entry.

Dr. Nathaniel Miller, 50, of Mullins, South Carolina, was arrested earlier this week on charges he misappropriated $503,199.50 from Marion School District 2, where he had served as superintendent until his resignation Tuesday. According to authorities, Miller admitted to taking the funds over a period of nearly four years between March 2006 and early January 2010 for his own person use, including paying mortgages, college tuition and rent for his children, among other things. Specifically, Miller was charged with embezzlement of public funds and faces up to 20 years in prison, plus restitution and fines, if convicted.

Update (11/16/10): Miller was formally indicted on 37 embezzlement counts today. The indictment also alleges that Miller embezzled "thousands of dollars" in 2004 when he was superintendent of Richland School District One in Columbia, South Carolina. Miller and a co-conspirator allegedly formed a phony company, Renaissance Educational Consultants, which billed the school district and from which they took the proceeds.

Update (10/19/11): Miller has been sentenced to six years in prison after pleading guilty.

Norma M. Blackwell, 47, now of Sebring, Florida, was sentenced to 17 months in prison for embezzling more than $153,000 from the Virginia Beach, Virginia-based law firm of Shuttleworth, Ruloff, Swain, Haddad & Morecock, P.C. where she had been employed as a bookkeeper. She has also been ordered to pay restitution in the amount of $153,203.71. According to prosecutors, Blackwell manipulated checks from the firm and mailed them to her family's creditors, including HSBC Bank, Juniper Bank, Target and J.C. Penney. The misappropriations reportedly lasted from April 2004 to July 2007. Blackwell, who was arrested last August plead guilty to mail fraud charges on September 29, 2009. The law firm has represented high profile professional athletes including Michael Vick and Allen Iverson.

Adam John Korejsza, 45, and his wife, Lisa Ann Rock-Korejsza, both of Detroit, Michigan, were ordered to pay $2.1 million, representing treble damages in a civil judgement for misappropriating $700,000 from the city of Rouge River, Michigan, with whom Korejsza had a contract to manage the city's prescription drug program. Korejsza also faces multiple criminal charges in the same case. Korejsza, who is the owner of owner of Manhattan Group Services, LLC, allegedly misappropriated more than $50,000 per month between January 2007 and September 2008 from insurance monies intended to pay for prescription drug coverage for city workers. He was arrested last November. Korejsza reportedly has prior felony convictions in 2006 for embezzlement and failure to pay child support. His next court appearance in the criminal case is scheduled for February 25th. Lisa Rock-Korejsza has a prior criminal history for passing bad checks in Florida.

Update (9/28/10): Adam John Korejsza pleaded guilty today to one count of racketeering, seven counts of embezzlement, and two counts of tax evasion in state court. Under the plea agreement, he will serve a total of 60 months in jail.

Vivian Gagnon-Vogel, 48, and George Vogel, 60, of North Adams, Massachusetts, have pleaded guilty to embezzling some $1.5 million from O'Connell Convenience Plus, where she had been employed as a bookkeeper and he as manager. According to authorities, Gagnon-Vogel handled cash and credit card receipts and took up to $1,000 per day in order to feed her drug habit. The thefts took place between December 2003 and November 2007, according to investigators. Specifically, the couple plead guilty last week to charges of embezzlement and falsifying corporate books. They are due to be sentenced on February 16th.

Update (5/24/10): Vivian Vogel was sentenced Friday to five to six years in state prison on her false entry charge, and ordered her to serve a concurrent four to five-year sentence on her embezzlement charge. George Vogel was sentenced to three to five years.

Donald Gerald Johnston, 46, of Hudson, Michigan has plead guilty to one count of embezzling for stealing $380,000 from Kecy Products Inc., a local auto parts company. Johnston was originally charged last June with 22 felony counts of embezzlement and criminal use of a computer. The other counts were dropped with the plea agreement. The thefts reportedly took place over more than three years, from September 1, 2005, to December 31, 2008. Johnston was fired in February 2009. Kecy Products has struggled financially, laying off some 70 employees out of 100 and has been sold. The company had allegedly defaulted on $8.7 million in loans from Fifth Third Bank which had filed a civil lawsuit to recover the monies.

Karin Andrea Goeldi, 44, of Akron, Ohio, has pleaded guilty to one count of aggravated theft for embezzling nearly $1.8 million from Cedarwood Development Inc., a real estate firm she had been employed by as executive assistant to the president for more than a decade. Goeldi faces a sentence of up to 10 years in a scheme that reportedly lasted nearly that long, from late December 1999 to July 10, 2009, when she was arrested. According to prosecutors, Goeldi wrote a "multitude" of checks payable to cash or herself. The checks thefts reportedly began in small amounts and gained momentum over time. The thefts added up to $1.78 million and much was spent on maintaining a lavish lifestyle, including real estate, lavish trips and luxury items. Goeldi is a native of Switzerland who came to the US in 1978, according to reports.

Tuesday, January 19, 2010

Lou Ann Allred, 60, of Callao, Missouri, has been indicted for allegedly embezzling some $150,000 from the coffers of Callao City, where she had been employed as city clerk. According to the indictment, Allred took cash meant as payments for city services to be deposited in the city's bank account and kept it for herself. She is also alleged to have written city checks to herself, forging the mayor's signature. The scheme is purported to have lasted approximately 4 years between 2004 and 2008. Allred was indicted on one felony count of mail fraud. She faces up to 20 years in prison, restitution and a fine of up to $250,000, if convicted.

Lisa Van Winkle of Tyndall, South Dakota, was sentenced to 10 years in prison with all but 90 days suspended, for embezzling some $107,000 from Gemar's Market where she had been employed. Specifically, Winkle plead guilty to one count of forgery and one count of grand theft by embezzlement. Winkle was also ordered to pay $106,745.51 in restitution. Winkle is believed to be between 30 and 34 years of age.

Patrick A. Meschede, 48, of Omaha, Nebraska, has been accused of embezzling more than $900,000 from the Moylan Iceplex at Tranquility Park where he had been employed as manager. Meschede allegedly deposited company checks into an account of a company he controlled, CPC, Inc., over a three year period from 2006 - 2009. Meschede is also accused of paying his personal vendors out of company funds. According to reports, Meschede was hired in 2004 to manage the facility and was given authority to pay bills, maintain the books and oversee accounts. He faces up to 60 years in prison and a $75,000 fine, if convicted on 3 counts of theft by deception.

Thursday, January 14, 2010

Marquet International released its annual report on embezzlement, The Marquet Report On Embezzlement for 2009. Some interesting conclusions can be made based upon the findings from the past two years reports, including:

Women are more likely to embezzle than men.

Men embezzle significantly more than women.

Perpetrators typically begin their embezzlement schemes in their early 40s.

By a significant margin, embezzlers are most likely to be individuals who hold financial positions within organizations.

The two broad industry categories that have the highest risk for a major embezzlement are Financial Services and Government Agencies/Municipalities.

The Financial Services industry suffers the greatest losses from major embezzlements.

On average, major embezzlement schemes last about 4½ years.

California and Florida are consistently the states that experience the greatest losses from major embezzlements.

The vast majority of major embezzlements are caused by sole perpetrators.

Gambling is a clear motivating factor in driving some major embezzlements.

Fewer than 10 percent of embezzlers have a criminal record – less than expected, but enough to suggest that pre-employment screening has merit.

Specific highlights from the 2009 study include the following:

The average loss was just over $1 million; the median loss was $386,500. These numbers were significantly lower than the 2008 report ($2.2 million and $500,000, respectively).

More than 7 percent of the cases involve perpetrators who reportedly had gambling problems, consistent with our 2008 findings.

5 percent of the cases involved perpetrators who had a prior criminal history, significantly higher that our 2008 findings (3 percent), but more consistent with our projection of 5 – 10 percent.

Employee misconduct and internal corporate fraud will be a continuing and growing problem as the U.S. economy continues to struggle. The seeds of future major embezzlements, yet to be discovered, are being sown in the current market environment. That having been said, the revelation of so many major embezzlements in the US in recent years is in part due to the downturn in the economy beginning in 2008. As the saying goes, “when the river runs dry, the jagged rocks are revealed.” Corporate fraud schemes tend to reveal themselves when organizations pay more attention to their finances. Other white collar crimes, such as investment frauds, simply collapse on themselves in economic downturns. I hope our annual report on embezzlement will add to the dialog and understanding of this insidious and pervasive type of corporate fraud.

Michael Joseph Willett, 40, of Newaygo, Michigan, pleaded not guilty to charges he embezzled $333,462 from Firstbank of West Michigan, where he had previously served as a vice president. Willett was indicted last December on 16 counts of misapplication of bank funds and identity theft in a scheme to embezzle from the bank that allegedly lasted 2 1/2 years, from August 2005 to February 2008. The scheme reportedly involved Willett creating fraudulent loans and lines of credit in the name of some of the bank's customers and pocketing the funds himself.

Update (4/1/10): Willett entered a plea agreement yesterday, pleading guilty to one count of theft of bank funds and one count of aggravated identity theft in exchange for 14 other counts being dropped. He still faces up to 30 years in prison and a $1 million fine.

A federal grand jury brought indictment charges against five illinois residents for allegedly participating in a scheme to embezzle $6 million from Caldwell Banker. The indictment names Douglas Volkman, 43, of Park Ridge, who was a Caldwell Banker employee; Michael Samojla, 42, of Itasca; Anthony Palermo III, 41, of Medinah; and Beverly Zeitz, 40, and Steven Zeitz, 43, both of New Lenox, Illinois. The embezzlement scheme allegedly involved the formation of phony vendors who billed Caldwell Banker over a period of 9 years for no services rendered, according to the indictment. The case follows a stabbing incident involving Volkman the day after Christmas in 2007 wherein he stabbed his boss in the neck with a long kitchen knife, fled on foot, but was promptly hit by a truck and thrown 33 feet. Both Volkman and his boss survived. The stabbing was apparently the result of his being confronted about the missing millions. Volkman has pleaded not guilty to charges of attempted first-degree murder and three counts of aggravated battery in the knife attack.

First Keystone National Bank in Berwick, Pennsylvania reported that the Federal Bureau of Investigation was investigating the apparent embezzlement by a former unnamed bank employee of some $850,000. No arrest or charges have been made at this time.

Wednesday, January 13, 2010

Lisa Duda, 39, of Temperance, Ohio, has been indicted by a grand jury for embezzling more than $204,000 from the St. Paul's Community Center where she had been employed in a finance position. According to prosecutors, Duda wrote unauthorized checks from the organization's coffers to herself over a four year period between October 2005 and September 2009. She was terminated by the organization's board last September after an internal investigation revealed the thefts.

Wesley Charles VandeStreek, 53, of Kalamazoo, Michigan, has pleaded no contest to two counts of embezzlement of $100,000 or more and one count each of embezzlement of $20,000 to $50,000 and of $1,000 to $20,000 in four separate cases of embezzlement totaling some $1.5 million. VandeStreek is alleged to have embezzled from four of his accounting clients. VendeStreek was originally arrested in April 2009 and is scheduled to be sentenced on April 26th. Prosecutors are recommending prison time for VandeStreek.

Douglas Ross Zuber, 51, of Scottsdale, Arizona, was sentenced to six years in prison plus sever years of supervised release for embezzling approximately $11 million from Harvard Investments, Inc. where he had been employed as executive vice president. Zuber was also ordered to pay $6.2 million in restitution. According to prosecutors, Zuber's scheme lasted about 7 years between 1999 and 2006 where in he set up seven false venders through which he was able to bill the real estate investment firm for work that was never completed. Zuber, who was originally indicted in October 2008, plead guilty to money laundering in August 2009. Zuber reportedly spend the money establishing a lavish lifestyle and purchased luxury residential properties and vehicles, among other things. Ironies of ironies, authorities found a draft of a book Zuber was writing, called Deeds of Trust -- a how-to on embezzling funds from your employer.

Sunday, January 10, 2010

Cheryl Lynn Holder, 55, of Red Bluff, California, was charged this week with embezzling $2 million from John Wheeler Logging Inc., where she had been employed as office manager. According to prosecutors, Holder's scheme lasted five years, from 2004 to 2009. Details of the nature of her embezzlement have not yet been released. Holder was a 20 year employee of the company, according to reports. Specifically, she has been charged with grand theft. Holder is also known as Cheryl Stone and Cheryl Webb, according to authorities. She is the wife of David Holder, who is a shareholder and president of the company. He has not been charged in the case.

Update (2/26/11): Holder, now 56, has plead guilty to one count of felony grand theft in connection with her embezzlement of some $2 million from John Wheeler Logging, Inc. over a five year period. She faces up to 3 years in prison upon sentencing, which is scheduled for April 5, 2011.

Sandra Dee Allison, 50, of Mineral, Virginia, was charged this week with embezzling some $100,000 from Dockside Realty for whom she had been employed as a bookkeeper. Allison's embezzlement scheme lasted approximately 3 1/2 years, dating back to 2006, according to authorities.

Update (7/21/10): Allison, who is now believed to have embezzled as much as $263,000, pleaded guilty to four felony counts of embezzlement in a plea agreement with prosecutors. Four other counts were dropped. Authorities alleged that Allison used company credit cards and accounts to make personal purchases and pay personal bills.

The Cincinnati Enquirer outlines the spate of white collar crimes in the past year or so in the Cincinnati and Northern Kentucky area in an article published yesterday. According to the article, some 25 embezzlers "met their downfall last year in Greater Cincinnati and Northern Kentucky, particularly in Butler County, when they were busted in cases totaling $2.2 million - a record-high for the county, officials believe." Warren County authorities are still looking for James T. Hammes, of Lexington, Ky., who was indicted last May on charges that he embezzled more than $8.7 million from a Pepsi bottling company. In Butler County, prosecutors handled more than $3.3 million in white collar crime cases and a new massive embezzlement case is reportedly soon to break, according to the article. The largest case last year in Butler County involved Cheryl L. Vogel, 46, who was sentenced to five years in prison for embezzling $671,000 from an auto dealership over a five-year period. In Hamilton County, prosecutors could not provide total losses for white collar cases they prosecuted, but cited one case in which Patricia Cottingham, 48, of California, Kentucky was sentenced to 15 years in prison for embezzling some $1.2 million from Spaces, an interior design company she had been employed by.

Clyde Thomas Beard, 45, of Anchorage, Alaska, was sentenced to 21 months in prison for mail fraud for an embezzlement scheme that bilked NANA Services, LLC out of some $188,000 for whom he had served as chief financial officer. Nana Services is a subsidiary of the NANA Regional Corporation, which administers resources held by Alaska Natives in northwestern Alaska. Beard was fired in February 2008 after the scheme came to light and plead guilty to the charges in September 2009. Prosecutors had alleged that Beard used his position as a CFO to cover up his unauthorized use of corporate credit cards for multiple personal items, travel expenses, and cable bills. The scheme allegedly lasted from April 2005 to February 2008.

Mary R. Storer, 40, of Wood River, Illinois, was sentenced to 2 1/2 years in prison for embezzling $266,056 from Elk Heating and Cooling, a local business for which she had been employed as office manager and bookkeeper. According to prosecutors, Storer's scheme began in 2006 shortly after she was hired by the company by having manager's sign stacks of checks, some of them blank, ostensibly to pay for office supplies, which she then cashed. She also took cash payments from clients, promising a discount on their invoices. Finally Storer manipulated the payroll such that she would take employee withholdings for retirement and vacation time. Storer pleaded guilty last September to tax evasion, willful failure to file federal income tax returns, embezzlement from an employee benefit plan and failure to pay employment taxes. According to press reports, Storer had racked up more than $200,000 in gambling debts which was in part a motivating factor for her embezzlement.

Saturday, January 9, 2010

Lois Beatrice Clemons, 57, of Winchester, Virginia, pleaded guilty Friday to embezzling more than $300,000 from the Shenandoah Valley Baptist Church and its Shenandoah Valley Christian Academy where she was employed as a bookkeeper. According to authorities, Clemons embezzled the money from December 2003 until January 2009, which she used to pay buy a house, make home improvements, purchase automobiles and pay school tuition for her children. She plead guilty to 55 counts of embezzlement in Frederick County Circuit Court and is due to be sentenced on March 4th.

Update (3/30/10): Clemons was sentenced to 8 years in prison and must pay $308,520 in restitution to the Shenandoah Valley Baptist Church and the Shenandoah Valley Baptist Academy as a result of her misappropriations.

Donald Hewitt, of Ira, Vermont, stands accused of embezzling nearly $400,000 from the town of Ira, where he had served as town treasurer. According to authorities, Hewitt began stealing funds from the town coffers in 2003 to pay his personal bills. The thefts apparently continued for six years until he resigned last November. He had served as town treasurer for some 32 years. Investigators are continuing with their audit before formal charges will be filed. Nevertheless, Hewitt has reportedly confessed to the embezzlement which is thus far estimated to be $382,357. According to reports, Hewitt did the town bookkeeping out of his own home and maintained the records there. We note that Hewitt was awared the "Vermont Public Service Award" in 2005.

Thursday, January 7, 2010

Victoria A. Jordan, 32, of Salisbury, Massachusetts has been charged with 15 counts of wire fraud for allegedly embezzling more than $450,000 from White Magic, Inc., a carpet cleaning equipment company where she had been employed as chief financial officer. According to prosecutors, Jordan inflated her salary, took other unauthorized compensation, putting her non-employee husband on the payroll, making unauthorized purchases of personal items with company credit cards; and using company funds to otherwise make unauthorized personal purchases. The scheme lasted from January 2004 to November 2008. Meanwhile, the company is in financial dire straits and must lay off as many as 25 employees. Jordan faces up to 20 years, plus fines on each count as well as restitution if found guilty.

Melissa Kay Grawey, 42, of Petoskey, Michigan, was sentenced to 11 months in prison for embezzling more than $96,000 from Northern Dental Group, PC. where she had been employed as an office manager. Grawney allegedly forged checks from the company over a 2 1/2 year period. Grawey was originally charged last May with eight felonies, including criminal enterprise, embezzlement between $50,000 and $100,000, forgery, and uttering and publishing.

Sherell Mitchell, 45, of St. Louis County, Missouri, has pleaded guilty to charges she embezzled more than $110,000 from the Communications Workers of America Local 86823, where she had been employed as Secretary-Treasurer. According to prosecutors, Mitchell wrote checks to herself and took cash from the union over a 7 year period. Mitchell reportedly spent much of the money at local casinos. Sentencing is scheduled for April 2, 2010.

Update (4/8/10): Mitchell Gets Off Light: Sherell Mitchell was sentenced to only six months of home detention, plus five years of probation and 200 hours of community service for embezzling more than $110,000 from the Communications Workers of America Union, Local 86823, where she was employed as a bookkeeper. She must also pay restitution. Mitchell has blamed her thefts on a gambling addiction.

Wednesday, January 6, 2010

Richard Elkinson, 76, of Framingham, Massachusetts, was arrested and charged yesterday with operating a Ponzi-type investment fraud scheme that bilked some 130 investors out of $29 million. According to prosecutors, Elkinson gave investors promissory notes bearing interest rates of up to 13 percent to fund a purported business that helped supply uniforms to governments and large organizations. The scheme unravelled last Spring when payments were not made on the promissory notes. Elkinson reportedly targeted wealty older Jewish investors through social networking groups in what is being described as an "affinity" scheme similar to that of Bernie Madoff. According to the Boston Globe, Elkinson allegedly used “finders’’ such as Jay Fialkow of RossFialkow Capital Partners to steer investors to him, in exchange for a 2 percent fee. The Globe reported that Fialkow said he had nearly $1 million of his own money invested with Elkinson, and family members invested another $400,000, according to the FBI affidavit. He was arrested in Mississippi. Investigators believe Elkinson was a big gambler who had large lines of credit at casinos in Las Vegas and elsewhere.

Bernie D. Metz, 57, of Valley Grove, West Virginia, pleaded guilty Monday to charges she embezzled nearly $9 million from the Center Valley Federal Credit Union in Wheeling for which she had served as CEO. According to prosecutors, Metz used some of the funds to build a restaurant and cabins she and her husband operated. She also reportedly spent the money on luxury automobiles and other personal items. Meanwhile, the credit union has been declared insolvent and will be closed. She faces 7 years and 3 months in prison as part of the plea bargain and must pay $8,989,484 in restitution. Prosecutors have reportedly agreed not to prosecute Metz' husband. Metz was originally arrested last July.

Saturday, January 2, 2010

Peggy A. Griffith, 46, of Struthers, Ohio, has been sentenced to six months in prison for embezzling between $120,000 and $320,000 from Y.O.H Surgical Associates, Inc. where she had been employed. The sentencing was the result of a plea agreement that will also require Griffith to repay the stolen funds. The funds were stolen over a period of "several" years, according to prosecutors.

Frances Louise Stewart, 52, of San Carlos, California, was arrested earlier this week on charges she embezzled more than $100,000 from the Silicon Valley Community Foundation where she had been employed in the human resources department. According to authorities, Stewart stole the funds from flexible spending accounts for health care expenses. The Foundation makes grants to many non-profit organizations in the area.

Karin Andrea Goeldi, 44, of Akron, Ohio and a native of Switzerland, has been indicted for allegedly embezzling nearly $1.8 million from Cedarwood Development Inc., a real estate firm she had been employed by as executive secretary for more than a decade. Goeldi has been indicted on one count of aggravated theft and faces up to 10 years in prison, plus restitution and a $20,000 fine if convicted. Authorities allege that over an eight year period, beginning in 2001, Goeldi wrote a "multitude" of checks payable to cash or herself. The checks thefts reportedly began in small amounts and gained momentum over time. The thefts added up to $1.78 million and much was spent on maintaining a lavish lifestyle, including real estate, lavish trips and luxury items. Goeldi was originally arrested last July and is scheduled for her next court hearing on January 16th.

About the Author - Chris Marquet

Chris Marquet is President, Investigative Services with SunBlock Systems, an investigations, litigation support, computer forensics & cyber security firm. Chris has over 34 years of professional experience in industry with Marquet International and prior stints with Kroll Associates, Citigate Global Intelligence and Decision Strategies/Vance International.
Chris is the author of many articles and white papers, including the annual Marquet Report on Embezzlement as well as the Marquet Report on Ponzi Schemes. He has lectured extensively on subjects relating to employee misconduct; due diligence; business intelligence, internal investigations, fraud, employee integrity, workplace violence, kidnapping, terrorism, crisis management and travel security.
Chris is a Certified Board Advisor and Board Member for the Center for Strategic Business Integrity. He received an A.B. degree from Dartmouth College in 1983, with a triple major in Physics, Economics, and Philosophy.
He can be reached at cmarquet@sunblocksystems.com